Aging demographics and emerging markets are creating a growing demand for more and better health care solutions and technological advances are creating new innovation opportunities in the medical device industry. At the same time, increased merger and acquisition activity, cost pressures, and ever-more vigilant regulatory compliance requirements are forcing medical device manufacturers to rethink their overall business models. While medical device manufacturers look for growth and profits in all corners of the globe, they often neglect large opportunities much closer to home — in their own service and parts operations. This industry analysis of a new thought leadership report reveals how medical device manufacturers are building world-class service and parts businesses to drive profitable growth.

Presenting the findings of the medical device industry analysis of the Global Benchmark Study on Service and Parts Management by member firms of Deloitte Touche Tohmatsu, the report highlights that:

• Service businesses are an increasing source of profit for medical device manufacturers
  Among the global medical device manufacturing companies surveyed, service business profitability is about 60 percent higher than the median overall business unit profitability.
• Service businesses offer immense opportunities for revenue growth
  Not surprising due given the unique and patented technologies of many medical devices, the average medical device company captures about 95 percent of the spare parts market for service of their own installed base of products. But in 'pure' services - such as customer service, field services, installation, maintenance and repair - the corresponding share drops sharply to 65 percent.
• Medical device companies struggle in developing service strategy and business design
  Many companies surveyed struggle to build the foundation for service excellence. Only about one fifth of the medical device companies benchmarked said they had extensive visibility into service profitability, customer profitability and market share growth metrics; and just 11 percent of the companies into parts profitability.
• Service execution does not consistently meet the industry's needs
  The majority of medical device companies surveyed are still unable to provide excellent and cost effective service. While the industry service rate averages remain high (93-95 percent) in comparison to other industries, the criticality of uptime and cost of breakdown in the medical device industry demand much higher service rate levels.  

To learn more about service excellence in the medical device industry, download the report below or contact us at globallshc@deloitte.com.

Find out more about how to participate in the overall Global Benchmark Study on Service and Parts Management survey or contact us at serviceandparts@deloitte.com.

Global Benchmark Study on Service and Parts Management
Deloitte's Global Benchmark Study on Service and Parts Management has produced in-depth benchmarking information of the service and parts businesses of some of the world's largest manufacturing companies across a range of sectors, including aerospace and defense, automotive, diversified and industrial products, high technology and telecommunications equipment, and life sciences/medical device manufacturers. Through this research, Deloitte is able to provide insights on how top-performing service and parts organizations are leapfrogging the competition and driving continuous improvement in operational and financial performance.